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A better analysis: There is no entity capable of deciding the value of houses or mortgages, or when they are "sufficiently underwater". Nor any one capable of deciding if the owner, the lender, or other circumstances caused the problem or who deserves to benefit from the solution.
The best solution: The home owner has the option now of mailing in the keys -- they should determine if that is in their interest and do it, rather than throwing good money after bad. The government should allow them (via guarantees), on the same basis as anyone else, to get loans for new housing if they have enough income, when they have a down payment, and if they are a good risk (ignoring for this purpose the fact that they defaulted on their previous mortgage.)
This will have the effect of putting more homes on the market, but also more buyers. The banks will be faced with well deserved losses on the loans they never should have made -- the more risky the loan, the bigger their loss. The homeowners will lose also, but in proportion to the excess size of the house they "bought" -- in short they may well wind up in a smaller house, or renting. The banks will have the opportunity to lend wisely to the new buyers in the market.
Note this plan requires no voluntary action by the bankers, only the homeowners and the government need to act.
The worthy public policy objective is to put folks in a home they can afford, if they can afford one. It should not be to keep everyone in the specific home they were in when the "music stopped". If most of the homeowners that are underwater mail in their keys, many will wind up in a very similar home across the street or down the block from the home they currently occupy.
And the market will have cleared.

The proposed transition to "full recourse loans" is a trick, a trap. It will be the final nail in the coffin for the middle class, ensuring that homeowners pay the full cost of the whole fiasco. If there is a movement to full-recourse, you can bet it will be followed by a long gradual deflation, squeezing every ounce of savings out of the middle class.